'Last Chance' DDA Meeting Next Week

Geneva - Ahead of what is being described as the "last chance" meeting next week of the "Five Interested Parties" the United States, the European Union, India, Brazil and Australia Indian trade minister Kamal Nath raised the stakes for a possible confrontation with the United States, charging that Washington has not substantially reduced its trade-distorting domestic subsidies in real terms in its latest proposal (WTD, 10/12/05).

Mr. Nath also criticized the United States for demanding too much of developing countries on market access.

The Indian trade minister whose country is a key member of the Group-of-20 developing-country coalition told WTD he made it clear to US Trade Representative Rob Portman that "political imperatives" in Washington must not determine market-opening in countries like India. He also said the United States needs to make a "leap" in reducing its domestic subsidies by agreeing to a 74-percent reduction rather than the overall 54 percent offered before making market access demands on developing countries. Real reductions must involve substantial paring down of US budgetary outlays for its farmers, he said.

The US proposal on trade-distorting domestic subsidies amounts to an actual increase in its domestic subsidies to $22.973 billion despite the proposed 53 percent cut in the overall trade-distorting domestic support, Mr. Nath insisted.

Next week's FIPs meeting might prove to be a "make or break" session for the entire Doha Development Agenda trade negotiations, the Indian minister said.

The FIPs group is expected to hold another session on November 7.

Attacking the EU

The Indian minister said the EU proposal on market access is far from as "offensive" as it had suggested. He suggested that Brussels' offer to reduce domestic support by some 70 percent is more credible. The United States and members of the Cairns Group of food-exporting countries attacked the EU for not offering to cut its tariffs steeply enough in a proposal discussed at last Tuesday's FIPs meeting.

On the G-20 plan, Minister Nath emphasized that the proposal makes it clear that developing countries could safeguard their farmers against subsidized imports from developed countries by giving them the right to have recourse to remedial action.

The United States suggests resurrecting the Uruguay Round "peace clause" which would prohibit challenges in the World Trade Organization against most agricultural exports from subsidizing countries.

The G-20 plan requires industrial nations to cut their domestic supports by 75 percent, while allowing developing countries to pare back their subsidies where they exist at all by 40 percent at most.

New Zealand trade minister Jim Sutton told WTD yesterday that the G-20 proposal on market access left emerging countries including China and India free of facing significant sacrifices. He said the G-20 demands on developing countries were far too "modest." As negotiations continue, New Zealand will demand greater market-opening in emerging developing countries as well as substantial reductions in reducing trade-distorting domestic subsidies, he said.

The G-20 plan also was criticized by Canada. A senior Canadian farm trade official told WTD that the proposal was "light" on market access and lacked symmetry in its overall approach to industrialized and developing countries.

A South American trade official said the G-20 was forced to scale down the level of ambition in market access in developing countries because of pressure from India, which took a tough stand during the G-20 discussions on Wednesday.

DDA 'Engine' Now Engaged WTO's Lamy

Geneva World Trade Organization chief Pascal Lamy yesterday said the "engines" of the Doha Development Agenda negotiations are now "switched on," but he cast doubts on whether it will leave the "tarmac" for a final landing this December at the Hong Kong ministerial conference (see related report this issue).

The critical agriculture "engine" of the Doha "aircraft" which has been shut down for the past several months has started operating thanks to the US proposal on domestic support, the WTO Director General told a meeting of the Trade Negotiations Committee. He called the US offer to reduce domestic subsidies "a significant contribution."

Mr. Lamy said the export competition and domestic support pillars are now in "shape" after several different ministerial meetings this week. He pointed out, however, that there is still substantial work to be done on the definition and criteria for the "blue box" and numbers to be plugged into the de minimis exception, as well as the overall cap in trade-distorting domestic support.

Even though the domestic support pillar is in better shape, Mr. Lamy stated, it still requires "obvious" movement by the big players including the United States.

At the end of the brief TNC meeting, the Director General told journalists that it is critical to make more progress on market access to assure success at Hong Kong. There is only a very short time left, he stated.

All Helped Move Negotiations Ahead

The Director General credited all parties including the United States, the EU, the Group-of-20, the defensive Group-of-10 and the Group-of-33 developing countries with moving the negotiations ahead. He said real negotiations are now in full play.

Commenting on the G-20 proposals on trade-distorting domestic support and market access, the Director General stated that the 36-percent decrease on average in market access for developing countries as compared to 24 percent in the Uruguay Round is "not insignificant."

Mr. Lamy will assume the role of "midwife" for the Doha round to persuade both export-dependent countries like the Cairns Group and the United States and importing countries, such as the EU and the G-10.

The Hong Kong meeting must conclude two-thirds of the final Doha work, Mr. Lamy stated. He suggested most of next year's work after a successful Hong Kong ministerial will largely be technical. Negotiations, however, are still going slowly in non-agricultural market access, services and rules, he noted.

Chief EU negotiator Carlo Trojan told the TNC that the EU offer submitted this week fulfills the mandate of the July 2004 framework agreement. He urged more progress in export competition which was not discussed this week.